Social Security issues debt-ceiling warning

By Matthew Heimer

The federal government shutdown hasn’t affected Social Security benefits. But it’ll be a different story if the government doesn’t raise the debt ceiling, according to the Social Security Administration. The Wall Street Journal’s Damian Paletta reports today that the administration has begun warning consumers who call in to ask about the effects of the shutdown that if Congress and the White House don’t reach an agreement to increase the government’s borrowing limit, it can’t guarantee that benefits will be paid in full.

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A debt-ceiling impasse could shut off the tap.

The government is expected to hit the current federal debt limit on Oct. 17. If the ceiling isn’t increased, the government will be limited to spending only the cash it has on hand and coming in the door, and the Treasury Department will have to decide who gets paid and who gets left in the lurch. (Interest payments on the existing federal debt would be likely to get top priority.) A Social Security spokesman tells Paletta that the agency began issuing its warning to retirees and other inquiring parties after consulting with Treasury officials.

Similar warnings could be issued to recipients of just about any kind of federal benefit, of course. But the roughly 46 million people who receive Social Security retirement and spousal benefits represent a large, often vulnerable and particularly politically active slice of the citizenry.

Correction: An earlier version of this post misspelled the surname of Damian Paletta.

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Encore looks at the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities, needs and priorities of people saving for and living in retirement. Our lead blogger is editor Matthew Heimer, and frequent contributors include editor Amy Hoak, writer Catey Hill, and MarketWatch columnists Elizabeth O’Brien, Robert Powell and Andrea Coombes. Encore also features regular commentary from The Wall Street Journal retirement columnists Glenn Ruffenach and Anne Tergesen and the Director of the Center for Retirement Research at Boston College, Alicia H. Munnell.